4324 · Dentsu Group

Will it survive?

• Can it pay its interest? -10.2×
  Does not cover its interest
  Operating income (¥289.2B) ÷ interest expense ¥28.4B
  What this means

  A full year of operating profit didn't cover the interest bill. This is the zombie zone: the business depends on refinancing, asset sales, or forbearance to service its debt.

• How heavy is the debt, net of cash? ¥173.1B
  Net debt against an operating loss
  Cash ¥295.2B − debt ¥468.2B
  What this means

  Netting ¥295.2B of cash and short-term investments against ¥468.2B of debt leaves ¥173.1B owed, with no operating profit this year to measure it against — understand that combination before anything else about the company. Net debt is the leverage figure that matters: the cash is already set against the debt. Strategic or illiquid investments aren't counted here.

• How long is cash tied up? -2079d
  Negative, funded by others
  DSO 462 + DIO 0 − DPO 2542 days
  What this means

  Days cash is tied up between paying suppliers and collecting from customers. A negative cycle is a quiet moat: suppliers and customers fund the operation (Buffett's “float”), the company grows on other people's money. (Little or no inventory, a services / asset-light model, so the inventory leg is ~0.)

Is it a good business?

• Return on invested capital 4%
  Below average through the cycle
  10-yr median, range -42%–27%; -42% latest = NOPAT (¥228.5B) ÷ invested capital ¥547.9B
  Industry peers: median 21%
  What this means

  The rate the business earns on the money tied up in it, Buffett's north star, because over time a stock tracks the ROIC beneath it. Above ~15% sustained hints at a moat; a return below the cost of capital (~8%) erodes value as a business grows rather than building it — the test Buffett weighs most. The headline is the median of the last 10 years (it ran -42% most recently), so one peak or trough year doesn't set the verdict. Asset-light businesses (R&D expensed, little capital) read artificially high, pair this with Owner Earnings.

• Owner-earnings margin —
  Not enough data
  Industry peers: median 36%
  What this means

  The filing data didn't include the inputs for this check.

• Are earnings backed by cash? ¥118.0B
  Loss, but cash-generative
  Net income (¥327.6B) · cash from operations ¥118.0B
  What this means

  The company reported a net loss, so a conversion ratio isn't meaningful. What matters then is whether operations still threw off cash, here, they did.

How is the cash used?

• Where do the earnings go? —
  Not enough data
  What this means

  The filing data didn't include the inputs for this check.

• Investing or harvesting? —
  Not enough data
  What this means

  The filing data didn't include the inputs for this check.

Durability & moat, 2016–2025

Whether the record’s returns held, and what the capital reinvested earned.

• Profitable years 5 of 10
  What this means

  Lost money in 5 year(s), look at what happened there before trusting the average.

• Return on capital ≥ 15% 1 of 10 yrs
  What this means

  A moat shows up as a high return on invested capital that holds year after year, not one good vintage.

• Operating margin 8% → −9% (3-yr avg ends)
  What this means

  Through the cycle the operating margin slipped — about 8% early to −9% lately, median 3% — competition or costs are biting in.

• Reinvestment, incremental ROIC returns capital
  What this means

  The capital base barely grew: this business returns cash through dividends and buybacks rather than reinvesting. Judge it on the cash returned, not on compounding.

• Worst year 2025 · −20.2% op. margin
  What this means

  Operations went underwater in 2025, understand why before trusting the good years.

• Share count −0.9%/yr
  What this means

  The share count is shrinking, buybacks are quietly growing your slice of the business.

• Dividend record paid
  What this means

  Paid a dividend in 10 of the years on record.